HOLDEN could be forced to close its Australian manufacturing plants by the new year if the Federal Government follows through on its election promise to slash $500 million in assistance, the automotive industry has warned.

Australian Manufacturing Workers’ Union SA Branch secretary John Camillo says some car parts suppliers are struggling to break-even and are at risk of collapse in the coming months.

He says if this happens, Holden would likely shut its Elizabeth and Melbourne manufacturing operations soon after.

“There are a lot of companies out there that are doing it extremely tough at the moment,” Mr Camillo said.

“Some of these (supply company) directors have to be very, very careful that if they run their companies insolvent then they run the risk of ending up in jail.

“If (a supplier) goes under there’s major problems. Where do you get that part from?”

“The Federal Government should have a finger on the pulse to watch this space very very carefully in regard to these first, second and third tier suppliers that are doing it really really tough.

“It will be very interesting next few months, next 18 months or so on.”

Adding to suppliers’ concerns is the threat of Australian carmakers reducing the number of vehicles they build, Mr Camillo said.

He said if this occurs, it would almost certainly spell the end of some suppliers.

“It could happen by the end of the year,” Mr Camillo said.

The union heavyweight said this would then likely trigger a vicious cycle within the industry where Holden would need to find another supplier, costs would go up, volumes would go down, and more suppliers would close.

“Holden, the government and unions all want the same thing, which is a long and orderly transition for our workforce.

“We’ve highlighted a risk and we’d like to see the Automotive Transformation Scheme (federal) funding flowing to those suppliers.”

Mr Camillo said it was crucial the Federal Government put back into the Auto Transformation Scheme the promised $500 million so that companies can access some support.

He said about 70 per cent of the component suppliers around Australia won’t be around in the next three years even if they received assistance to innovate or diversify.

He said the union is about two weeks away from taking a package to Holden workers, which covered a deal on the closure of the Elizabeth manufacturing plant and a collective agreement for next two or three years.

Mr Camillo reiterated his warning as an attendee at a manufacturing future forum at Innovation House in Mawson Lakes organised by Federal northern suburbs-based MP Tony Zappia and supported by Senator Kim Carr and South Australian Manufacturing Minister Susan Close.

The forum - to discuss support available under the SA Government’s $60 million Our Jobs Plan and Manufacturing Works strategy - was attended by a broad spectrum of manufacturing industry players, including representatives from Holden, auto parts suppliers Tenneco Australia and Futuris Group and food manufacturers like Spring Gully Foods and Bellis Fruit Bars.

Ms Close called on the Federal Government to “roll up its sleeves and lend a hand”.

“We are profoundly disappointed that the Federal Government is taking the $500 million that was in the budget for automotive transformation and reducing that to $100 million of which South Australia is only guaranteed about $30 million.”

Senator Karr said the Federal Government had cut $2.5 billion from industry assistance programs.

“For blue-collar workers, this is a government that has turned its back on their welfare, their family’s welfare and South Australia.”

“This is a government that has a profound hostility to blue-collar workers, a profound hostility to manufacturing,” he said.

Federal Industry Minister Ian Macfarlane said the government was working with the industry and “we hope that Holden will continue to do that as well”.

“We realise there is concern right across the industry and particularly with workers who will face retrenchment as a result of Holden’s decision to cease production in 2017,” he said.

“We’re also aware that it is important to Holden, that they maintain production until the end of 2017 when their new model from overseas arrives.

“So the whole industry has to work together to ensure that we get outcomes that not only see workers retrained and put into new jobs - and that’s part of the $155 million Growth Fund that we’ve put in place – but also need to ensure that those component industries are able to transition to new manufacturing areas and new market opportunities.

“So we are all working together on this, and Holden needs to play its part in that.”

“The language I have been reading in the papers is a major concern. Why should we have taxpayer money be sent overseas for other people building ships for Australia at the expense of jobs in Australia,” Mr Camillo said.

He said the industry employed about 3000 workers in defence.

“We need to make sure we get the new frigates and other ships at ASC because if they buy them from overseas then most people will lose their jobs; those people’s skills will disappear and there’s no opportunity for other people to move into that area.”

Senator Carr said South Australia had the capability to be able to build larger naval vessels.

“I have no doubt we need to obviously improve our production processes and we have got innovation for that. We have to constantly have the skills that are up to speed and ensure we have people available to undertake the work.

“But the answer is not to go offshore, the answer is to turn to our own people’s ingenuity, our own people’s skills and our own people’s capacity.

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